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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission File No. 001-36276

 

ULTRAGENYX PHARMACEUTICAL INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

27-2546083

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

60 Leveroni Court
Novato, California

94949

(Address of principal executive offices)

(Zip Code)

(415) 483-8800

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.001 par value

RARE

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesNo

As of October 30, 2023, the registrant had 82,114,350 shares of common stock issued and outstanding.

 


 

ULTRAGENYX PHARMACEUTICAL INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2023

INDEX

Page

 

 

 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

1

 

 

 

 

 

Part I –

Financial Information

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss

5

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

8

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

 

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

 

 

 

 

 

 

 

Item 4.

Controls and Procedures

35

 

 

 

 

 

Part II –

Other Information

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

36

 

 

 

 

 

 

 

Item 1A.

Risk Factors

36

 

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

72

 

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

72

 

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

72

 

 

 

 

 

 

 

Item 5.

Other Information

72

 

 

 

 

 

 

 

Item 6.

Exhibits

73

 

 

 

 

 

 

 

Signatures

 

74

 

 

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or the Quarterly Report, contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words, or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

our commercialization, marketing, and manufacturing capabilities and strategy;
our expectations regarding the timing of clinical study commencements and reporting results from same;
the timing and likelihood of regulatory approvals for our product candidates;
the anticipated indications for our product candidates, if approved;
the potential market opportunities for commercializing our products and product candidates;
our expectations regarding the potential market size and the size of the patient populations for our products and product candidates, if approved for commercial use;
estimates of our expenses, revenue, capital requirements, and our needs for additional financing;
our ability to develop, acquire, and advance product candidates into, and successfully complete, clinical studies;
the implementation of our business model and strategic plans for our business, products and product candidates and the integration and performance of any businesses we have acquired or may acquire;
the initiation, timing, progress, and results of ongoing and future preclinical and clinical studies, and our research and development programs;
the scope of protection we are able to establish and maintain for intellectual property rights covering our products and product candidates;
our ability to maintain and establish collaborations or strategic relationships or obtain additional funding;
our ability to maintain and establish relationships with third parties, such as contract research organizations, contract manufacturing organizations, suppliers, and distributors;
our financial performance and the expansion of our organization;
our ability to obtain supply of our products and product candidates;
the scalability and commercial viability of our manufacturing methods and processes;
developments and projections relating to our competitors and our industry;
stagnating or worsening business and economic conditions and increasing geopolitical instability, including inflationary pressures, general economic slowdown or a recession, rising interest rates, foreign exchange rate volatility, financial institution instability, and changes in monetary policy; and
other risks and uncertainties, including those listed under Part II, Item 1A. Risk Factors.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those discussed under Part II, Item 1A. Risk Factors and elsewhere in this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

1


 

This Quarterly Report also contains estimates, projections, and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained such industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)

 

September 30,

 

 

December 31,

 

 

2023

 

 

2022

 

ASSETS

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

72,575

 

 

$

132,944

 

Marketable debt securities

 

369,519

 

 

 

614,818

 

Accounts receivable, net

 

79,263

 

 

 

40,445

 

Inventory

 

31,802

 

 

 

26,766

 

Prepaid expenses and other current assets

 

46,029

 

 

 

68,926

 

Total current assets

 

599,188

 

 

 

883,899

 

Property, plant, and equipment, net

 

296,811

 

 

 

259,726

 

Equity investments

 

4,039

 

 

 

5,531

 

Marketable debt securities

 

82,071

 

 

 

148,970

 

Right-of-use assets

 

26,427

 

 

 

25,961

 

Intangible assets, net

 

157,302

 

 

 

160,105

 

Goodwill

 

44,406

 

 

 

44,406

 

Other assets

 

27,896

 

 

 

16,846

 

Total assets

$

1,238,140

 

 

$

1,545,444

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

33,357

 

 

$

43,274

 

Accrued liabilities

 

178,622

 

 

 

204,678

 

Contract liabilities

 

 

 

 

1,479

 

Lease liabilities

 

12,067

 

 

 

11,779

 

Liabilities for sales of future royalties

 

29,932

 

 

 

 

Total current liabilities

 

253,978

 

 

 

261,210

 

Lease liabilities

 

34,555

 

 

 

19,814

 

Deferred tax liabilities

 

31,667

 

 

 

31,667

 

Liabilities for sales of future royalties

 

875,996

 

 

 

875,439

 

Other liabilities

 

10,230

 

 

 

4,820

 

Total liabilities

 

1,206,426

 

 

 

1,192,950

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock — 25,000,000 shares authorized; nil outstanding as of September 30, 2023 and
   December 31, 2022

 

 

 

 

 

Common stock — 250,000,000 shares authorized; 72,174,307 and 70,197,297 shares issued
   and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

72

 

 

 

70

 

Treasury stock, at cost, 8,444 and nil shares held as of September 30, 2023 and December 31, 2022, respectively

 

(381

)

 

 

 

Deferred compensation obligation

 

381

 

 

 

 

Additional paid-in capital

 

3,298,357

 

 

 

3,140,019

 

Accumulated other comprehensive loss

 

(2,244

)

 

 

(6,573

)

Accumulated deficit

 

(3,264,471

)

 

 

(2,781,022

)

Total stockholders’ equity

 

31,714

 

 

 

352,494

 

Total liabilities and stockholders’ equity

$

1,238,140

 

 

$

1,545,444

 

See accompanying notes.

3


 

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Product sales

$

42,349

 

 

$

32,503

 

 

$

128,757

 

 

$

90,019

 

Royalty revenue

 

55,703

 

 

 

5,373

 

 

 

106,916

 

 

 

15,634

 

Collaboration and license

 

 

 

 

52,827

 

 

 

71,184

 

 

 

154,328

 

Total revenues

 

98,052

 

 

 

90,703

 

 

 

306,857

 

 

 

259,981

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

10,987

 

 

 

8,631

 

 

 

33,158

 

 

 

23,001

 

Research and development

 

157,245

 

 

 

237,297

 

 

 

487,892

 

 

 

534,981

 

Selling, general and administrative

 

74,917

 

 

 

69,841

 

 

 

232,966

 

 

 

205,290

 

Total operating expenses

 

243,149

 

 

 

315,769

 

 

 

754,016

 

 

 

763,272

 

Loss from operations

 

(145,097

)

 

 

(225,066

)

 

 

(447,159

)

 

 

(503,291

)

Interest income

 

5,881

 

 

 

3,483

 

 

 

18,135

 

 

 

4,876

 

Change in fair value of equity investments

 

(1,419

)

 

 

(1,626

)

 

 

(1,492

)

 

 

(21,139

)

Non-cash interest expense on liabilities for sales of future royalties

 

(17,665

)

 

 

(14,505

)

 

 

(48,676

)

 

 

(27,141

)

Other expense

 

(699

)

 

 

(1,105

)

 

 

(2,380

)

 

 

(1,746

)

Loss before income taxes

 

(158,999

)

 

 

(238,819

)

 

 

(481,572

)

 

 

(548,441

)

Provision for income taxes

 

(650

)

 

 

(6,287

)

 

 

(1,877

)

 

 

(7,147

)

Net loss

$

(159,649

)

 

$

(245,106

)

 

$

(483,449

)

 

$

(555,588

)

Net loss per share, basic and diluted

$

(2.23

)

 

$

(3.50

)

 

$

(6.81

)

 

$

(7.96

)

Weighted-average shares used in computing net loss per share,
    basic and diluted

 

71,664,493

 

 

 

70,054,173

 

 

 

70,987,801

 

 

 

69,834,037

 

See accompanying notes.

4


 

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

$

(159,649

)

 

$

(245,106

)

 

$

(483,449

)

 

$

(555,588

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(249

)

 

 

(420

)

 

 

188

 

 

 

(1,211

)

Unrealized gain (loss) on available-for-sale securities

 

1,103

 

 

 

(888

)

 

 

4,141

 

 

 

(7,607

)

Other comprehensive income (loss):

 

854

 

 

 

(1,308

)

 

 

4,329

 

 

 

(8,818

)

Total comprehensive loss

$

(158,795

)

 

$

(246,414

)

 

$

(479,120

)

 

$

(564,406

)

See accompanying notes.

 

5


 

ULTRAGENYX PHARMACEUTICAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Treasury

 

 

Deferred Compensation

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Stock

 

 

Obligation

 

 

Equity

 

Balance as of June 30, 2023

 

 

71,465,424

 

 

$

71

 

 

$

3,236,879

 

 

$

(3,098

)

 

$

(3,104,822

)

 

$

(381

)

 

$

381

 

 

$

129,030

 

Issuance of common stock in connection with
  at-the-market offering, net

 

 

611,282

 

 

 

1

 

 

 

24,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,792

 

Stock-based compensation

 

 

 

 

 

 

 

 

36,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,245

 

Issuance of common stock under
   equity plan awards, net of tax

 

 

97,601

 

 

 

 

 

 

442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

442

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

854

 

 

 

 

 

 

 

 

 

 

 

 

854

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(159,649

)

 

 

 

 

 

 

 

 

(159,649

)

Balance as of September 30, 2023

 

 

72,174,307

 

 

$

72

 

 

$

3,298,357

 

 

$

(2,244

)

 

$

(3,264,471

)

 

$

(381

)

 

$

381

 

 

$

31,714

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Treasury

 

 

Deferred Compensation

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Stock

 

 

Obligation

 

 

Equity

 

Balance as of December 31, 2022

 

 

70,197,297

 

 

$

70

 

 

$

3,140,019

 

 

$

(6,573

)

 

$

(2,781,022

)

 

$

 

 

$

 

 

$

352,494

 

Issuance of common stock in connection with
  at-the-market offering, net

 

 

1,175,584

 

 

 

1

 

 

 

53,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53,299

 

Stock-based compensation

 

 

 

 

 

 

 

 

100,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100,780

 

Issuance of common stock under
   equity plan awards, net of tax

 

 

801,426

 

 

 

1

 

 

 

4,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,261

 

Deferred compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(381

)

 

 

381

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

4,329

 

 

 

 

 

 

 

 

 

 

 

 

4,329

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(483,449

)

 

 

 

 

 

 

 

 

(483,449

)

Balance as of September 30, 2023

 

 

72,174,307

 

 

$

72

 

 

$

3,298,357

 

 

$

(2,244

)

 

$

(3,264,471

)

 

$

(381

)

 

$

381

 

 

$

31,714

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Treasury

 

 

Deferred Compensation

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Stock

 

 

Obligation

 

 

Equity

 

Balance as of June 30, 2022

 

 

70,010,398

 

 

$

70

 

 

$

3,071,000

 

 

$

(8,914

)

 

$

(2,384,083

)

 

$

 

 

$

 

 

$

678,073

 

Stock-based compensation

 

 

 

 

 

 

 

 

36,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,096

 

Issuance of common stock under
   equity plan awards, net of tax

 

 

69,379

 

 

 

 

 

 

1,074

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,074

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,308

)

 

 

 

 

 

 

 

 

 

 

 

(